The Fed

The Federal Reserve wants to be perceived as coming to the economy's rescue, but the Fed can't save you. Mark shares some insights from Austrian Business Cycle Theory.

Contrary to myths of “Fed independence,” the Federal Reserve and the Treasury Department work closely together to keep monetary inflation going nonstop. 

A few years ago, the leftist publication The Intercept claimed that inflation only hurts the “one percent,” but is “good” for everyone else. The truth is much different, as the Fed’s inflationary policies have benefited the politically-connected crony class.

Price inflation is never caused by greed. It's always caused by a growing money supply. The money supply has grown big-time since 2020, and now we pay a lot more for food and housing.

A few years ago, the leftist publication The Intercept claimed that inflation only hurts the “one percent,” but is “good” for everyone else. The truth is much different, as the Fed’s inflationary policies have benefited the politically-connected crony class.

We are stuck in the middle of the road, far away from full socialism or the unhampered market.

The Fed promises a soft landing, but the fact that the Fed now plans to start cutting interest rates is one of the strongest recession signals we can get.

As the Federal Reserve manipulates the money supply and interest rates, the yield curve becomes a less reliable indicator of economic activity. The more the Fed plays havoc with the system, the more we see the boom-and-bust syndrome.

Keynesian economists claim that the economy needs at least 2-3% inflation in order to avoid business cycles. But these inflation rates over time are economically ruinous and they actually harm economic growth.

The Fed for many years has manipulated the money supply in order to attempt to keep interest rates below market levels. At some point, however, the market prevails in one way or another.